9M 2019 RESULTS PRESENTATION...2019/11/14 · 9M 2019 RESULTS PRESENTATION Telepizza Group 3 Note: 1. Group system sales • Largest pizza delivery operator by number of stores •

9M 2019RESULTS PRESENTATION

14.11.2019

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The information contained in the Presentation has not been independently verified and some of the information is in summary form. No representation or warranty, express or implied, is made by the Company or its affiliates, nor by their directors, officers, employees, representatives or agents as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions expressed herein. None of Telepizza, nor their respective directors, officers, employees, representatives or agents shall have any liability whatsoever (in negligence or otherwise) for any direct or consequential loss, damages, costs or prejudices whatsoever arising from the use of the Presentation or its contents or otherwise arising in connection with the Presentation, save with respect to any liability for fraud, and expressly disclaim any and all liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in connection with the accuracy or completeness of the information or for any of the opinions contained herein or for any errors, omissions or misstatements contained in the Presentation.

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The information contained in the Presentation, including but not limited to forward-looking statements, is provided as of the date hereof and is not intended to give any assurances as to future results. No person is under any obligation to update, complete, revise or keep current the information contained in the Presentation, whether as a result of new information, future events or results or otherwise. The information contained in the Presentation may be subject to change without notice and must not be relied upon for any purpose.

This Presentation contains financial information derived from Telepizza’s audited and unaudited consolidated financial statements. Financial information by business segments is prepared according to internal Telepizza’s criteria as a result of which each segment reflects the true nature of its business. These criteria do not follow any particular regulation and can include internal estimates and subjective valuations which could be subject to substantial change should a different methodology be applied.

In addition, the Presentation contains certain annual and quarterly alternative performance measures which have not been prepared in accordance with International Financial Reporting Standards, as adopted by the European Union, nor in accordance with any accounting standards, such as “system sales”, “like-for-like chain sales growth”, “EBITDA” and “digital sales” and others. These measures have not been audited or reviewed by our auditors nor by

independent experts, should not be considered in isolation, do not represent our revenues, margins, results of operations or cash flows for the periods indicated and should not be regarded as alternatives to revenues, cash flows or net income as indicators of operational performance or liquidity.

Market and competitive position data in the Presentation have generally been obtained from industry publications and surveys or studies conducted by third-party sources. There are limitations with respect to the availability, accuracy, completeness and comparability of such data. Telepizza has not independently verified such data and can provide no assurance of its accuracy or completeness. Certain statements in the Presentation regarding the market and competitive position data are based on the internal analyses of Telepizza, which involve certain assumptions and estimates. These internal analyses have not been verified by any independent source and there can be no assurance that the assumptions or estimates are accurate. Accordingly, no undue reliance should be placed on any of the industry, market or Telepizza’s competitive position data contained in the Presentation.

You may wish to seek independent and professional advice and conduct your own independent investigation and analysis of the information contained in this Presentation and of the business, operations, financial condition, prospects, status and affairs of Telepizza. The Company is not nor can it be held responsible for the use, valuations, opinions, expectations or decisions which might be adopted by third parties following the publication of this Presentation.

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DISCLAIMER

9M 2019 RESULTS PRESENTATION

2


Telepizza Group

3Note:1. Group system sales

• Largest pizza delivery operator by number of stores

• Market leader in its core markets: Spain, Portugal, Chile and Ecuador

• Strategic shift to being a “Brand Operator” following the completion of the strategic partnership with Yum! Brands

• Diversified business model, with profitability generated from

• Own store sales

• Royalties and services from franchisees

• Supply chain sales

• Vertically integrated supply chain is a key differentiating factor: provides full production and food service offering to franchisees

Key Facts – 9M 2019

2 Global

Brands

2,37036 82%

Stores in the

MF perimeterCountriesFranchised

Stores

7 23 2Dough

Production

Facilities

Logistics

Centers

Innovation

Labs

Vertically Integrated Supply Chain

€1,242m

System

Sales (LTM)3


9M 2019 highlights

4.8% Group

system sales growth, commercial activity on track

5.3% EMEA system sales growth, solid top line results in mature geographies

4.3% LatAmsystem sales growth, positive across region

Adjusted EBITDA of

€49.8m -3.9% decline, due to early upfront investments in Pizza Hut partnership

Net new stores in MF

perimeter: +33, and

+58 Telepizza stores converted, with double digit sales uplift. Pace of store openings & conversions to accelerate

Underlying free cash flow generation of

€34.5m

4


Progress in value creation plan and new corporate structure

Acquired PH operations in Chile, divestment in Peru

Investment in capacity and Pizza Hut homologation in factories in Colombia, Ecuador and Chile

Strategic alliance with Pizza Hut in place

33 new stores opened in the MF perimeter, new openings accelerating towards year end

58 stores converted, positive initial sales uplift exceeding expectations

KKR launch a tender offer for Telepizza Group

Tasty Bondco 1 issues €335 million of senior secured notes due 2026

KKR acquires 56% of Telepizza Group

KKR, main shareholder and partner

Fully aligned to support Telepizza strategy

5

Take private process

Telepizza

July

KKR increases its ownership to 83.9% through mandatory purchase order and Telepizza is de-listed

December May

Industrial strategy on track, supply plants construction in LatAmcompleted, initial synergies expected towards year end

Commercial activity update

Note:1. Excluding discontinued operations of Poland and Czech Republic; 2018 sales are shown pro forma for Pizza Hut system sales contribution

450 469

432 455

9 M 2 0 1 8 9 M 2 0 1 9

9M 2019: Top line growth on track

COMMERCIAL ACTIVITY UPDATE

Group system1 sales growth (2018 sales are shown pro forma for Pizza Hut system sales contribution)

9M 2018

€882m9M 2019

€924m+4.8%

7

Systemsales (€m)

EMEA

LatAm

Segments performance – 9M 2019


5.3%

5.2%

System sales growth1 (%)

System sales growth1 constant currency – Telepizza (%)

EMEA

4.3%

(4.1%)

Latam

EMEA

• Spain and Portugal: solid top line performance, with medium single-digit growth while building growth platform for Pizza Hut in Spain

• Rest of Europe: double-digit growth in Ireland and Switzerland

LatAm

• Positive topline growth across the region, underpinned by positive currency effect

• Telepizza negative constant currency results reflect conversion of Telepizza stores to Pizza Hut

• Pizza Hut, being mainly a franchised business, in transition with opportunity to accelerate growth and fix some underperforming countries

Top line growth across regions

8

4.8%

3.5%

Total

Note:1. Excluding discontinued operations of Poland and Czech Republic; 2018 sales are shown pro forma for Pizza Hut system sales contribution

5.3%System sales growth1 constant

currency (%) 0.4% 2.8%

6.2%System sales growth1 constant currency – Pizza Hut (%) 1.3% 2.0%

85.0%Telepizza system sales weight (%) 15.0% 50.1%

16.2%Pizza Hut system sales weight(%) 83.8% 49.9%

Update on Chile and Ecuador


9

Chile• Disruption in normal operations over 20

days

• Significant impact with c. 30 stores with

some level of damage (insurance covered)

• Unrest still impacting current trading

Ecuador• Disruption in normal operations during 11

days

• No stores damaged

• Recovery to normal trend already in place

Note:1. Total openings minus total closures in the Pizza Hut master franchise perimeter (Spain, Portugal, Switzerland and Latam ex-Brazil), including

Telepizza and Pizza Hut stores

1,363 1,366

974 1,004

D E C - 2 0 1 8 S E P - 2 0 1 9

Unit expansion and conversion 9M 2019+33 new stores1 in the MF perimeter+58 Telepizza stores converted to Pizza Hut, double digit sales uplift in Latam


Total storesDec-18

2,337Sep-19

2,370

10

EMEA

LatAm

M&A update


• Acquired 45 stores from local Pizza Hut franchisee

• FY 2018 €2.4 million EBITDA

• €19.7 million investment, 8.0x multiple pre-

synergies

• Synergies due to corporate structure and supply

chain integration, c.6.4x multiple expected post-

synergies

July 2019 – Pizza Hut acquisition in Chile October 2019 – Divestment in Peru

Pizza Hut acquisition in Chile

11

• Agreement to transfer Telepizza operations in Peru

to local Pizza Hut franchisee

• Marginal impact at EBITDA level

• Significant cash proceeds

• Store development and supply chain agreement

Divestment of operations in Peru

Financial information


106.5%

System sales1 Revenues2

924

292253

15.5%

System sales and Revenues

Evolution in sales and revenues reflecting the change in the perimeter after the inclusion of Pizza Hut operations, the incremental system sales of Pizza Hut translate into a 6% royalty + 6% marketing fee revenue

Group system sales1 and Revenues (€m)

FINANCIAL INFORMATION

134 166

119126

9M 2018 9M 2019

329

792119

133

9M 2018 9M 2019

+6%

24%

12%

141%

448

13

Notes:1. Excluding discontinued operations of Poland and Czech Republic; 2018 sales are shown in actual perimeter2. The difference on own stores sales revenue and own stores system sales is related to the reclassification of Peru and Paraguay as discontinued

Own stores

Franchised stores

Own stores

Supply chain, royalties, marketing & other income


Notes:1. Financial information excluding impact of IFRS-162. EBITDA 9M 2018 has been slightly restated from historical reporting, please refer to p.23 in appendix

EBITDA1 bridge – 9M 2018 to 9M 2019FINANCIAL INFORMATION

51.849.8

2.6

3.1

(3.5)

(4.3)

Adjusted EBITDA 9M 2018 LfL growth, store openingsand conversions

M&A Supply synergies Headwinds (Spain & Chile) Pizza Hut investments Adjusted EBITDA 9M 2019

.14

(€m)

Store openings and conversions accelerating

Ecuador and Chile acquisition of local Pizza Hut franchisees

Tangible contribution in Q4

Impact of minimum salary and Pizza Hut turnaround in Spain and macro environment in Chile

Upfront investments in infrastructure


Notes:1. Financial information excluding impact of IFRS-162. Including personnel costs, rents, advertising, transport and other expenses3. As detailed in the appendix

Income statement summary1FINANCIAL INFORMATION

€m (unless otherwise stated) 9M 2018 9M 2019 % change

Own Store Sales 119.2 126.4 6.0%

Supply chain, royalties, marketing & other income 133.7 165.7 23.9%

Total revenue 253.0 292.2 15.5%

COGS -66.6 -73.8 10.7%

% Gross margin 73.7% 74.8% +1.1p.p.

Royalties and fees to Yum! (fully offset in revenue line) - -22.5 n.m.

Operating Expenses excluding royalties and fees to Yum!2 -134.6 -146.1 8.6%

Adjusted EBITDA 51.8 49.8 -3.9%

% Adjusted EBITDA margin 20.5% 17.0% -3.5p.p.

Non-recurring expenses related to Pizza Hut alliance and new corporate structure3 -13.6 -10.9 n.m.

Non-operating items3 -2.6 -2.1 n.m.

Phasing impacts3 0.9 -4.1 n.m.

Reported EBITDA 36.5 32.6 -10.5%

15


Capital expenditure – 9M 2019FINANCIAL INFORMATION

3.3 3.8

2.13.2

3.5

8.22.1

4.5

1.8

3.1

1.7

1.5

1.6

0.8

9 M 2 0 1 8 9 M 2 0 1 9

25.1

16.2

• Capex increase in 2019 reflecting

initial investment focus to

integrate Pizza Hut business and

update stores

• M&A capex in 2019 mainly

related to Pizza Hut acquisition in

Chile in Q3

Capex (€m)

5.5

23.8

M&A capex

16

Others

Buybacks

Store openings

Conversions & relocations

Digital & IT

Supply chain

Maintenance


Underlying Free Cash Flow Generation – 9M 2019FINANCIAL INFORMATION

49.8

34.5(3.8)

(5.3)

(6.1)

Adjusted EBITDA Tax and others Advanced royalty Maintenance capex Underlying free cash flow

17

(€m)


Cash flow statement summaryFINANCIAL INFORMATION

€m (unless otherwise stated) 9M 2018 9M 2019 % change

Underlying EBITDA 51.8 49.8 -3.9%

Non-recurring expenses related to Pizza Hut alliance and new corporate structure -13.6 -10.9 n.m.

Non-operating items -2.6 -2.1 n.m.

Phasing impacts 0.9 -4.1 n.m.

Tax and others -2.0 -3.8 n.m.

Change in working capital1 -8.2 8.8 n.m.

Advanced royalty - -5.3 n.m.

Operating Cash Flow 26.2 32.4 23.4%

Maintenance capex -5.2 -6.1 17.8%

Expansion capex -10.9 -19.0 73.4%

M&A -5.5 -23.8 n.m.

Investing Cash Flow -21.7 -48.9 125.7%

Cash Interest -3.9 -5.3 35.9%

Sale of treasury Stock -15.5 16.5 n.m.

Dividend / Tasty BidCo acquisition bridge repayment2 -5.3 -130.9 n.m.

Bond proceeds - 335.0 n.m.

Refinancing of Senior Facilities - -200.0 n.m.

Bond one-off expenses - -13.1 n.m.

Tasty DebtCo proceeds - 2.3 n.m.

Swap cancellation - -0.6 n.m.

Financing Cash Flow -24.6 3.8 n.m.

Underlying Free Cash Flow3 44.5 34.5 -22.4%

€m 9M 2018 9M 2019

Cash Balance

Cash BoP 87.3 56.7

∆ Cash -20.1 -12.8

Cash EoP 67.2 43.9

18

Notes:1. Impacted by one-off effect due to delay in royalty payment to Yum2. Dividend paid to Telepizza Group shareholders including Tasty BidCo as part of the Bond pushdown mechanics3. Underlying free cash flow is Adjusted EBITDA minus tax and others, advanced royalty and maintenance capex


Net debt and leverage - 9M 2019FINANCIAL INFORMATION

9M 2019 LTM proforma EBITDA1: €72.5m

19

€m

9M 2019 LTM adjusted EBITDA 66.3

Annualized EBITDA of Pizza Hut Chile acquisition

2.2

Average of estimated procurement synergies for the first two years

4.0

9M 2019 LTM proforma EBITDA 72.5

Notes:1. LTM proforma EBITDA is Adjusted EBITDA plus proforma of annualized results of M&A and supply synergies2. Leverage is the ratio between net debt and LTM proforma EBITDA

335.0

291.1

(43.9)

Gross debt(senior secured notes)

Cash position Net debt as of September 30th, 2019

Leverage2:

4.0x

Closing remarks

Q&A

APPENDIX


Note:1. Financial information excluding impact of IFRS-16

Adjusted EBITDA1 2018 reconciliation

23

(€m)

65.2 64.3

68.3

(1.0) (1.4)

0.53.4 1.5

Comparable EBITDA FY2018 (as presented in FY

2018 resultspresentation)

Accounting adjustments FY 2018 ComparableEBITDA post audit (as

presented in 2018 annualaccounts)

Exclusion of build-upcosts

Reclasification ofexpenses as non-recurring

Inclusion of non-operating items

Inclusion of phasingimpacts

FY 2018 Adjusted EBITDApost audit (as presented

in 2019)

Q1 2018

Q2 2018

Q3 2018

Q4 2018

€18.4m

€16.4m

€16.9m

€16.5m


Note:1. Financial information excluding impact of IFRS-16

Reported EBITDA1 2018 reconciliation

36.2 36.50.3

Reported EBITDA 9M 2018 (as presented in 2018 report) Reclasification of Poland and Czech as discontinuedoperations

Reported EBITDA 9M 2018 (as presented in 2019 report)

24

(€m)

• SG&A EBITDACOGSRevenues

Supply

Sales

Own Stores

Sales

Franchised

Stores

Sales

LfL Own

Stores

New Own

Stores

LfL

Franchised

Stores

New

Franchised

Stores

System Sales

Royalties to

Pizza Hut2

Raw Materials,

etc.

6% Royalties +6% Marketing fee1

Royalty fees

Own Stores

Sales

3.5% Royalties

Fees to Pizza

Hut and others

%Margin

SG&A and others

Revenues to EBITDA bridge

25

Notes:1. Marketing fee expended in full 2. Net royalty paid reduced due to royalty credit


EBITDA


Poland 33 58 91 33 61 94 38 81 119

Czech Republic 8 0 8 8 0 8 10 0 10Discontinued

Store Count

26

NUMBER OF STORES

9M 2019 2018 2017

OWN FRANCHISED STORES

TOTAL STORESOWN FRANCHISED

STORESTOTAL STORES

OWN FRANCHISED STORES

TOTAL STORESSTORES STORES STORES

EMEA 153 899 1052 160 885 1045 180 816 996

Spain 104 627 731 113 607 720 137 571 708

Ireland 0 160 160 0 159 159 0 133 133

Portugal 49 80 129 47 78 125 43 73 116

Russia 0 16 16 0 15 15 0 14 14

Switzerland 0 8 8 0 8 8 0 9 9

Angola 0 6 6 0 5 5 0 5 5

UK 0 2 2 0 3 3 0 2 2

Others 0 0 0 0 10 10 0 9 9

Latin America 148 275 423 185 288 473 213 269 482

Chile 74 74 148 80 85 165 92 68 160

Guatemala 0 97 97 0 96 96 0 93 93

Colombia 25 40 65 41 42 83 45 45 90

El Salvador 0 49 49 0 49 49 0 48 48

Peru 41 6 47 41 6 47 45 4 49

Bolivia 0 7 7 0 7 7 0 7 7

Paraguay 5 0 5 5 0 5 6 0 6

Ecuador 3 2 5 18 3 21 23 4 27

Others 0 0 0 0 0 0 2 0 2

Total Group 301 1174 1475 345 1173 1518 393 1085 1478


NUMBER OF STORES

9M 2019 2018

OWN STORES FRANCHISED STORES TOTAL STORES OWN STORES FRANCHISED STORES TOTAL STORES

EMEA 20 116 136 0 121 121

Portugal 0 93 93 0 93 93

Spain 20 23 43 0 28 28

LatAm 144 799 943 38 852 890

Mexico 0 249 249 0 248 248

Peru 0 90 90 0 90 90

Chile 62 11 73 0 58 58

El Salvador 0 60 60 0 58 58

Costa Rica 0 58 58 0 59 59

Puerto Rico 0 58 58 0 58 58

Honduras 0 56 56 0 54 54

Ecuador 55 0 55 38 0 38

Guatemala 0 52 52 0 52 52

Caribbean 0 49 49 0 47 47

Panama 0 42 42 0 44 44

Dominican Republic 0 29 29 0 29 29

Colombia 27 0 27 0 10 10

Paraguay 0 19 19 0 19 19

Nicaragua 0 17 17 0 17 17

Venezuela 0 9 9 0 9 9

Total 164 915 1,079 38 973 1011

Store Count

27

GLOSSARY 1/2

◼ System sales: System sales are own store sales plus franchised and master franchised store sales as reported to us by the franchisees and master franchisees

◼ LfL system sales growth: LfL system sales growth is system sales growth after adjustment for the effects of changes in scope and the effects of changes in the euro exchange rate as explained below

– Scope adjustment. If a store has been open for the full month, we consider that an “operating month” for the store in question; if not, that month is not an “operating month” for that store. LfL system sales growth takes into account only variation in a store’s sales for a given month if that month was an “operating month” for the store in both of the periods being compared. The scope adjustment is the percentage variation between two periods resulting from dividing (i) the variation between the system sales excluded in each of such periods (“excluded system sales”) because they were obtained in operating months that were not operating months in the comparable period, by (ii) the prior period’s system sales as adjusted to deduct the excluded system sales of such period (the “adjusted system sales”). In this way, we can see the actual changes in system sales between operating stores, removing the impact of changes between the periods that are due to store openings and closures; and

– Euro exchange rate adjustment. We calculate LfL system sales growth on a constant currency basis in order to remove the impact of changes between the euro and the currencies in certain countries where the Group operates. To make this adjustment, we apply the monthly average euro exchange rate of the operating month in the most recent period to the comparable operating month

of the prior period

◼ EBITDA: EBITDA is operating profit plus asset depreciation and amortization

◼ Adjusted EBITDA: Adjusted EBITDA is EBITDA adjusted for costs that are non-operating in nature, phasing impacts, and non-recurring costs related to both the Pizza Hut alliance and the new corporate structure

◼ LTM proforma EBITDA: LTM proforma EBITDA is Adjusted EBITDA plus proforma of annualized results of M&A and supply synergies

◼ Non-operating items: Certain expenses, mainly related to onerous leases that are non-operating in nature

◼ Phasing impacts: Normalization of certain expenses across the year

◼ Non-recurring costs related to Pizza Hut alliance and new corporate structure: Extraordinary expenses related to the set-up of the Pizza Hut alliance (strategy consulting, legal fees, performance bonuses and other expenses), also extraordinary expenses related to the set-up of new corporate structure (finance consulting, legal fees and other expenses) and minor impact related to discontinued operations

28


GLOSSARY 2/2

◼ Underlying free cash flow: Underlying free cash flow is Adjusted EBITDA minus tax and others, advanced royalty and maintenance capex

◼ Net debt: Net debt is total outstanding amount of issued senior secured notes minus cash position at the end of the period

◼ Leverage: Leverage is the ratio between net debt and LTM proforma EBITDA

29


GRACIAS

Documents

9M 2019 RESULTS PRESENTATION...2019/11/14 · 9M 2019 RESULTS PRESENTATION Telepizza Group 3 Note: 1. Group system sales • Largest pizza delivery operator by number of stores •